Why Carrizo Oil & Gas (CRZO) Stock Is Higher On Tuesday

NEW YORK (TheStreet) -- Shares of Carrizo Oil & Gas Inc. (CRZO) are higher 2.33% to $57.03 on Tuesday after the company reported an increase in revenue and net income for the 2014 first quarter.

The independent energy company said revenue was up 40% to $157.2 million versus $87.5 million from the first quarter 2013.

Carrizo reported its net income was $23.4 million, or 52 cents per basic share and 51 cents per diluted share, compared to $20.6 million, or 52 cents per basic share and 51 cents per diluted share from the year ago quarter.

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The company's adjusted EBITDA for the most recent quarter increased 23% over the 2013 first quarter to $114.3 million from $93.3 million.

TheStreet Ratings team rates CARRIZO OIL & GAS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CARRIZO OIL & GAS INC (CRZO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 20.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, CRZO's share price has jumped by 123.06%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CARRIZO OIL & GAS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CARRIZO OIL & GAS INC reported lower earnings of $0.56 versus $1.28 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $0.56).
  • The gross profit margin for CARRIZO OIL & GAS INC is currently very high, coming in at 85.45%. Regardless of CRZO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CRZO's net profit margin of -18.49% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $57.00 million or 24.99% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: CRZO Ratings Report
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